5/4/10 - SPX EOD - DOUBLE THREE : ZIGZAG

SPX - 60 MIN PREFERRED COUNT

SPX - DAILY EMAs

SPX - DAILY SMAs

E-MINI

SPX - 60 MIN REVERSE FIBONACCI

Well today was a good day for the bears. The entire month of April provided a nice opportunity to trade a very decent range. 

As posted this morning, there were two combination Elliott Wave patterns I wanted you to be aware of. The triangle option is certainly out, however, the flat-x-zigzag combination is right on the money at this time. 

I was looking at 1180 for support but knew if it broke, 1170 +/- 5 was next on the list. 1170 coincided with wave (c) = 1.618 (a) of the zigzag (~1166), the 50 day MA and a heavy Fibonacci confluence occurs here. I posted on this last week on reverse Fibonacci techniques (click on the link as I used the technique to predict where the market may head and find a turn). An  updated reverse Fibonacci chart is above.

The count still allows for (c) to equal 2.168*(a), which equals approximately 1140. So we will have to keep an eye out for that. From a probability standpoint per EW, the 1.618 ratio is a more typical relationship that wave C has to A.

So what does this pattern have going for it?

1. Structurally the count looks complete (technically can be counted as complete). 

2. The structure off 1219.80 looks primarily as a 3-wave structure vs a 5-wave impulse

3. Fibonacci relationship of Wave C to A

4. Market found support at the 50 day MA

5. Trendline support : Ascending (Marc 2009 - Feb 2010) and the lower Channel line

Some alternatives for the double three combination are:

1. Minute [x] of Minor B may have completed at 1205.13 on 5/3, which would mean today's drop is only the beginning of (a) of [y]

2. Minute [x] is appropriately labeled and we may be working out a second flat vs a triangle. 

3. Wave (c) of [y] may have some more to go; target ~ 1140.

Both alternates imply that a bounce back up is required before resuming a drop to complete the double three formation. 

For the bear case, here are few things to keep in mind.

1. The count appears to have a nested 1-2 formation. This implies that today's drop was the 3rd of the 3rd and should follow through some more tomorrow.

2. Notice on the daily SMA chart, the last decent pullback we had rested on the 50 day MA and followed through the following day before finding support at 1044.50.  

3. A break of the neckline of the large head and shoulders pattern. Would like to see a backtest and drop to confirm.

I'm anticipating a bounce back towards 1180-1185 since either bull / bear case will seek this at a minimum, whether it is a backtest of the neckline, a wave 4 retrace of 3 or an x wave up of another flat. Where it goes from there will be telling. 

GL!

5/3/10 - SPX EOD

SPX - DAILY PREFERRED

 DOUBLE THREE COMBINATION

 Elliott Wave International

 DOUBLE THREE COMBINATION

 Elliott Wave International

  

It's certainly nice when the market goes your way after making a call . Last night's post called for a move to 1205 and today we got it.

The market was able to close above the key moving averages once again. So what is now in store? The market continues to slosh sideways within a rectangular pattern.

I have provided two  figures from Elliott Wave which are called double three formations. This formation is called a combination since there are a combination of EW patterns stacked together separated by an "any wave" or "X" wave.

I hope these figures/formation will help you understand what my current thoughts are for this Minor B wave that appears to be taking on a rectangular pattern.  These are but two examples of a combination that I believe we may be witnessing for Minor B.

Compare the two figures above with my 60 minute chart below and you will see something similar is developing. I drew in red lines of some possible paths the market may take. In my example below, I drew in red lines for the second (or double) "three" as another a-b-c resembling a flat. 

The figures above provide two different options, a triangle and a zigzag as the second (or double) "three". So these are final patterns to be looking for as well over the next week or so. So keep an eye for another flat, triangle or zigzag. 

But first we have to complete what I believe is a minute [x] wave or as the figures above labels as "any three". I consider today's rise as part of minuette (c) of minute [x] of Minor B. Targets for this (c) are:

if (c) = (a) = 1215
or if (c) = 1.618*(a) = 1231

**Note: I just thought of something. On the 60 min chart below, my minute [x] wave may also have completed on 4/29 and we may be working on the second "three" now. If there is more evidence of this occurring, I'll update my charts to reflect that should the need arise.**

** One more thing. I normally do not post about Fibonacci time ratios but for those who believe in it, Minor B would complete at .382 time of A at approximately 5/12. We'll see**
 

SPX - 60 MIN PREFERRED

SPX - 5 MIN PREFERRED

I also have a few other options on the table as well. The alternate counts are labeled in gray (notice that the alternate counts are stacked in order of preference). The following is a summary :

... today's rise was minuette (iii) of [v].
...or: we are working on a larger minuette (c) wave down towards 1150
...or: we are working on minuette (iii) down

I posted a 5 minute chart this morning using TOS (since I'm still having problems on my Strategydesk) and highlighted some channels as potential paths for the market. It appears the red center channel was breached to the upside and capped at the upper blue channel. The market pulled back and so far has found support back at the red center channel.


Based on the wave count, I believe it most likely will take out the upper blue channel again but we will have to see if it holds.

So there is work to be done on both the bull and bear camps. We have key support (1180) and resistance (1220) levels to watch as a break in either direction will dictate what we ultimately have. 

GL!